Icici Venture

Discovering New Businesses QAI - Economic Times Conference September 13, 2002

Knowledge is an embedded differentiator in all businesses IP (Tech/Biotech)

Increased use of knowledge capital

Services (Financial/ Telecom)

Services (Hospitality /Airlines)

Knowledge creators  Supplying tools to other industries to become more effective and efficient 

Customer retention by churn management  Tailor-made products for different customer profiles  Cross-selling to increase per customer  contribution Affiliation programs for better customer retention 

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Creating brands to differentiate  Salt - Captain Cook, Tata  Atta - Annapurna  Superior product development  Effective supply-chain management for better vendor management 

Commodities (Agri-based/ Industrial)

Understanding customer behaviour to offer right products at an appropriate time and price

Various players work together as a cohesive unit to create a knowledge enterprise Academia

Government

Entreprene ur Venture Capital

Industry

Partners in the knowledge business need to understand the objectives and limitations of other players

Entrepreneurs need to be “realistic” and “opportunistic” in knowledge businesses 

Understand the capital requirement and success probability  The

entire new drug discovery process requires an investment of $300-500 mn and success rate is 1/10000

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Understand his limitations in covering the entire value-chain of knowledge creation  Identify

the right stage to pass on the product development to more capable players  Create effective alliances in delivering the final product to the customer

Indian Pharma players have a well defined game plan in drug discovery COST : 25%  

Ranbaxy - Licensed RBx2258 to Schwarz AG Dr. Reddy - Licensed DRF2593 & DRF 2725 (antidiabetic) to NovoNordisk and DRF4158 to Novartis

NCEs SYNTHESIS

IN VITRO & IN VIVO SCREENING FOR LEAD IDENTIFICATION

PRECLINICAL TOXICOLOGY (GLP)

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APPLIED RESEARCH

•Analytical •Scale up •Manufacturing •Dosage forms

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Cipla and Dr. Reddy have created alliances in overseas markets for distribution Ranbaxy has set up its own distribution network

NDA

IND

CLINICAL TRIALS Submission Submission PHASE I - III

MULTI DISCIPLINARY DISCOVERY PHASE ( 3 -4 YRS) COST : 20%

Estimated International Drug Discovery Cost $ 300 - 500 Million

CLINICAL RESEARCH (3 - 6 YRS) COST : 55%

FDA REVIEW OF NDA

REGULATORY (2 YRS)

MARKET

Industry forces can play an important role in creating knowledge based businesses 

Leading companies in overseas markets have played an active role in developing new businesses by:  providing

capital  working with entrepreneurs in identifying opportunities and helping them build the business  creating an exit mechanism through acquisitions 

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Intel, GE, Microsoft and Cisco have leveraged entrepreneurial talent to discover new businesses Effective lobbying by industry associations can help in shaping up government policies - CII, NASSCOM

Knowledge businesses require “knowledgeable” financiers 

Financiers need domain knowledge to understand the business  Capital

requirement  Gestation period 

Low understanding of pure knowledge business in banking system has resulted in lack of empathy with knowledge companies  Insignificant

physical assets  difficulties in assigning value to knowledge/IP 

Effective networking with industry and investment bankers can create increase depth of market for investments in

Academia provides the “raw material” for knowledge businesses 

Academia has twin objectives of creating:  Commercial

IP from R&D activities  Technical manpower 

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US universities have successfully commercialized academic research with the help of the industry Harvard Endowment Fund contributes to VC funds and helps them in identifying new opportunities Indian Universities have made a beginning  IIT

Bombay Incubator  IISc - Simputer  IIT Chennai - Prof. Ashok Jhunjhunwala

Government can be a powerful enabler in creating knowledge businesses 

Govt. can facilitate the knowledge economy by:  Creating

a conducive legal & regulatory environment  Developing the core infrastructure  Direct financial support to R&D activity 

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Singapore Government has actively facilitated knowledge businesses (GIC, Sing Tech, Singtel) In India:  GoI’s

telecom policy has accelerated growth in

ITES  GoI’s nod for GM seeds can lead to grow in agri-biotech  Proactive IT & biotech initiatives in Karnataka

To Summarise 

Indian knowledge engine has delivered results in past ...

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… and now has started recognising the inherent strength of itself

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What it needs is a collaborative effort from all the wheels to reach to the final destination of being a knowledge leader…

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... by delivering knowledge “Made in India” rather than “Made by Indians”

ICICI Venture continues to play a leading role in discovering new businesses 

ICICI Venture has been the pioneer in supporting new businesses in emerging sectors  IT

services - Kale, Geometric, SQL Star  Retail - Shopper Stop, Crossword, Subhiksha, Mars  Media - TV 18, AajTak, Creative Eye, Miditech  Bio technology - Biocon, Avesthagen 

ICICI Venture works with industry, government and academia to support entrepreneurs in managing companies at various stages in their life cycle

Thank You